Fitch Solutions trims 2021 growth projection for PH amid stricter quarantine restrictions, surge in COVID-19 cases

enablePagination: false
maxItemsPerPage: 10
maxPaginationLinks: 10

Metro Manila (CNN Philippines, April 5) — Fitch Solutions has slashed its growth projection for the Philippine economy this 2021 amid the recent spike in COVID-19 infections and the resulting stricter lockdown rules.

In a report dated April 1, the London-based information services company announced it scaled down its economic outlook for the country from 7.6% to 5.8% “with risks very much tilted to the downside.”

RELATED: World Bank slashes 2021 growth forecast for PH, notes ‘high’ COVID transmission, ‘lagging’ vaccine rollout

The revised projection dwells below the 6.5% to 7.5% forecast range currently eyed by the Development Budget Coordination Committee (DBCC) for this year.

The Philippines has been breaking record after record in its daily infection tally and active cases over the past weeks. This forced the government to place Metro Manila, Bulacan, Cavite, Laguna and Rizal — collectively known as NCR Plus or Greater Manila Area — under enhanced community quarantine from March 29 to April 4 after previously being under general community quarantine.

Authorities eventually announced an extension of the area’s ECQ status by a minimum of one week given the rise in infections.

Fitch Solutions noted that the Philippine economy is “highly vulnerable” to such lockdowns, especially since it relies heavily on private expenditure and investment. Growth shall lag again until such measures are eased, it added.

The company also noted that the IHS Markit Manufacturing Purchasing Managers’ Index stood at 52.5 in February, same as the month before, indicating a gradual improvement in activity. However, the recent tightening of restrictions might reverse this, it said.

“[T]he slow vaccine rollout and recurrent difficulties in containing outbreaks look set to stall the recovery further,” added Fitch Solutions, noting the Philippines has inoculated only less than 1% of its population as of end-March.

The Philippine economy remains in recession, with its recent 8.3% contraction in the fourth quarter of 2020 bringing down full-year economic growth to -9.5%. This is the worst annual nosedive since the government started collecting data on yearly growth rates in 1946.